How do I add Pay Rates, Allowances and/or Deductions (Pay Types)?

Many Awards include allowances that factor up a Payee's Rate Per Hour (Loaded Rate) and are paid for all purposes, such as when calculating payments for leave or overtime. When a payee is on leave, you replace the base rate with the absence while reporting the separately itemised components of the Industry Allowance and Tool Allowance, as the payee is still entitled to these amounts. You may have historically set up your payroll using a single rate that includes the Payees’ Rate Per Hour and all-purpose allowances. However, it is now essential in STP2 that those allowances be identified because they are treated differently in different situations, and being unable to identify them may disadvantage your Payee. For example, the ATO treats allowances in a tax return differently from how Services Australia defines those allowances when assessing a benefit claim.

In STP Phase 2, you must separately report all-purpose allowances against the relevant allowance type unless;

1. The allowance forms part of an amount you need to report as overtime.

2. You're paying the employee amounts, which are cash out of leave in service (paid leave type C) or unused leave on termination (paid leave type U).

First, confirm within your Award or Agreement if 

1. An All Purpose Allowance is applicable.

2. Casual Payees are paid the all Purpose Allowance on their Casual Ordinary Hourly Rate. For example, under the;

   1. Building and Construction General On-site Award [MA000020]. Clause 12.5 states that where the relevant penalty rate is 150%, the employee must be paid 175% of the ordinary hourly rate prescribed for the employee’s classification, and where the relevant penalty rate is 200%, the employee must be paid 225% of the ordinary hourly rate prescribed for the employee’s classification. This means the Casual Loading Component is added to the Ordinary (Full-Time) Hourly Rate AFTER the Overtime calculation is performed.

   2. Food, Beverage and Tobacco Manufacturing Award [MA000073]. Clause 10.4 states that where this award refers to a penalty rate, overtime rate or shift loading as being calculated as a percentage of the ordinary hourly rate, that reference will (for a casual employee) instead be taken to be a reference to the casual ordinary hourly rate if the entitlement applies to a casual employee. This means the Casual Loading Component must be added to the Ordinary (Full-Time) Hourly Rate BEFORE the Overtime calculation is performed, thus entitling them to the Casual Ordinary Hourly Rate.

3. Next, create Pay Types to cater for these requirements;

   1. Add a Pay Rate (An All Purpose Allowance is applicable).

   2. Add an Allowance (Available in All Purpose Allowance).

4. Assign the relevant Pay Types to the required Payees;

   1. Add an Allowance in All Purpose Allowance for a Payee.

   2. Add a Pay Type in the Pay Template for a Payee.

We know several awards that include the following statement within the guidelines for casual payees. Please review your Award to confirm if this clause is included and whether all-purpose allowances are required.

Where this award refers to a penalty rate, overtime rate or shift loading as being calculated as a percentage of the ordinary hourly rate, that reference will (for a casual employee) instead be taken to be a reference to the casual ordinary hourly rate if the entitlement is applicable to a casual employee.

For example, under the Manufacturing and Associated Industries and Occupations Award 2020 [MA000010]. The percentage set in the Casual Loading (OTE) and/or the Casual Loading  Pay Rates must be changed to;

• 28.75% when the Payee is paid 115% of the hourly rate. (Less than 10-hour break between shifts).

• 31.25% when the Payee is paid 125% of the hourly rate. (Ship trials at the wharf - technical field).

• 32.50% when the Payee is paid 130% of the hourly rate. (Permanent night shift).

• 37.50% when the Payee is paid 150% of the hourly rate. (Saturday - shift worker).

• 41.25% when the Payee is paid 165% of the hourly rate. (Working through a meal break - employee entitled to 15% loading (afternoon and night shift).

• 45.00% when the Payee is paid 180% of the hourly rate. (Working through a meal break - employee entitled to 30% loading (night shift).

• 50.00% when the Payee is paid 200% of the hourly rate. (Sunday - shift worker).

• 62.50% when the Payee is paid 250% of the hourly rate. (Public holiday - noncontinuous shift worker).

To manually calculate the relevant percentage for certain pay types which will be used for Casual Payees, you will need to;

1. Calculate 25% of the full-time rate.

2. Multiply the above result by the required factor (e.g. 150%).

3. Access the Percentage Calculator and enter the calculated amount and full-time rate into the second line.

4. E.g., 8.47 is what per cent of 22.61 = 37.46%.

Based on this guidance, we have found that the Casual Loading (OTE) and/or the Casual Loading Pay Rates need to be copied, and the % of the Rate Per Hour needs to be changed to ensure the Payee is paid correctly.

1. Select Pay Types.

2. Locate the Pay Rate you require by manually scrolling through the Pay Type List, entering the name into Search or using Show Advanced Filters.

3. Once the Pay Rate has been located, select Actions > Copy.

4. Change the $ (or % of Rate Per Hour) as required.

5. Change any other details as required, then select Save.